The numbers: The New York Fed’s Empire State business conditions index fell 13.5 points to 3.7 in August, signaling a slower pace of growth, the regional Fed bank said Monday. Economists had expected a reading of 17, according to a survey by Econoday. The index had surged in July after being in negative territory since the pandemic began.
Any reading above zero indicates deteriorating conditions.
What happened: The new-orders index fell 15.6 points to negative 1.7 in August while shipments fell 11.8 points to 6.7. Unfilled orders fell sharply and inventories slipped. The employee index inched up 2.4 points to 2. The prices received index climbed above zero for the first time since March. Optimism about the six-month outlook moved lower in July. The future capital expenditures index slipped 3.1 points to 6.
Big picture: The data fit with expectations of a moderation in the economy in August. Manufacturing has reported strong growth in recent months but has yet to recover to pre-pandemic levels. Employment is lagging behind.
What are they saying? “Looking ahead, the manufacturing recovery will settle into a slower path than the immediate partial snap back that was spurred by re-openings. Soft demand, supply chain disruptions, and elevated uncertainty are set to persistently constrain the manufacturing rebound until a health solution for the virus is found. Our baseline forecast foresees manufacturing taking until 2022 to return to pre-virus levels of activity,” said Oren Klachkin, economist at Oxford Economics.